Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. Insurance in Australia is big business. What's more, it's one that affects almost every one of us from the everyday - home and contents, car health, the life insurance - through to the professional - workers compensation, indemnity, cybercrime, insurance. Like many industries that have been around for a long time, insurance is rapidly evolving, being pushed ahead by technology. Much like what FinTech has done for financial services, insurtech is doing for insurance. My guest today is Rita Yates, the Chief Executive Officer and Co-founder of Insurtech Australia, a national, not for profit organisation representing and advocating for members and partners in insurance technology. Rita, welcome to Fear and Greed.

Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. Insurance in Australia is big business. What's more, it's one that affects almost every one of us from the everyday - home and contents, car health, the life insurance - through to the professional - workers compensation, indemnity, cybercrime, insurance. Like many industries that have been around for a long time, insurance is rapidly evolving, being pushed ahead by technology. Much like what FinTech has done for financial services, insurtech is doing for insurance. My guest today is Rita Yates, the Chief Executive Officer and Co-founder of Insurtech Australia, a national, not for profit organisation representing and advocating for members and partners in insurance technology. Rita, welcome to Fear and Greed.

Thanks for having me.

Thanks for having me.

What is Insurtech for the dummies like me?

What is Insurtech for the dummies like me?

Well, Insurtech in its very simplest form is essentially insurance technology. So there's a couple of different levels to explain Insurtech. The first, I guess, represents insurtech organisations that predominantly as startups and scale ups building tech solutions for the insurance space. The second level to the definition really is the insurance incumbent organisations, so the big insurers, brokers, et cetera, that essentially build technology into their businesses and it's, I guess, the secondary definition of insurtech.

Well, Insurtech in its very simplest form is essentially insurance technology. So there's a couple of different levels to explain Insurtech. The first, I guess, represents insurtech organisations that predominantly as startups and scale ups building tech solutions for the insurance space. The second level to the definition really is the insurance incumbent organisations, so the big insurers, brokers, et cetera, that essentially build technology into their businesses and it's, I guess, the secondary definition of insurtech.

OK, so let's take those two. If we take the first one, and I suppose I'm akin to neobanks and that sort of thing in the banking industry, it's the startups changing the insurance sector. What are they looking at? What sorts of things are they developing?

OK, so let's take those two. If we take the first one, and I suppose I'm akin to neobanks and that sort of thing in the banking industry, it's the startups changing the insurance sector. What are they looking at? What sorts of things are they developing?

Yeah, look, great question. And the answer to that really is that they are developing solutions for every aspect of the insurance value chain. So that begins from where people go to buy their insurance and where insurance is distributed right through to the claims process, which is often the most important element of insurance. So it's when an incident occurs and as an individual or a business, you actually have to make a claim. And the solutions that they are developing are essentially focused on ensuring that there is a far better experience that is far more efficient. It is in line with what consumers expect today from every industry that they engage with. So essentially, consumers expect 24/7 capabilities, instant service, online channel access and the ability to do everything on their smartphone. And traditionally that has not been available in the insurance industry. So insurtech is really helping to support those capabilities and also just to redefine and transform what insurance actually means. So building brand new products that go to market that better reflect our lifestyles today, like gig economy insurance, pay as you drive insurance, and essentially creating a much more trusted environment for consumers that take out insurance.

Yeah, look, great question. And the answer to that really is that they are developing solutions for every aspect of the insurance value chain. So that begins from where people go to buy their insurance and where insurance is distributed right through to the claims process, which is often the most important element of insurance. So it's when an incident occurs and as an individual or a business, you actually have to make a claim. And the solutions that they are developing are essentially focused on ensuring that there is a far better experience that is far more efficient. It is in line with what consumers expect today from every industry that they engage with. So essentially, consumers expect 24/7 capabilities, instant service, online channel access and the ability to do everything on their smartphone. And traditionally that has not been available in the insurance industry. So insurtech is really helping to support those capabilities and also just to redefine and transform what insurance actually means. So building brand new products that go to market that better reflect our lifestyles today, like gig economy insurance, pay as you drive insurance, and essentially creating a much more trusted environment for consumers that take out insurance.

Okay. Then the second part is what the big guys are doing. And presumably, they're adopting some of these sorts of forms of insurance or service models.

Okay. Then the second part is what the big guys are doing. And presumably, they're adopting some of these sorts of forms of insurance or service models.

They are indeed. And I think there's absolute acceptance these days that in the insurance landscape, you must be digitally transforming your business to keep up with essentially what consumers are demanding today. And so certainly they are adopting these technologies and they're doing this for the most part by partnering with these insurtech organisations in many different fashions. But also they are, I guess, redefining their strategies to build digital transformation into their strategies. So that could be actually working internally to transform what they are doing internally. And then the second piece to that is really working with some of these much more innovative, nimble digital solutions by partnering with them externally as well to deliver to consumers what is required.

They are indeed. And I think there's absolute acceptance these days that in the insurance landscape, you must be digitally transforming your business to keep up with essentially what consumers are demanding today. And so certainly they are adopting these technologies and they're doing this for the most part by partnering with these insurtech organisations in many different fashions. But also they are, I guess, redefining their strategies to build digital transformation into their strategies. So that could be actually working internally to transform what they are doing internally. And then the second piece to that is really working with some of these much more innovative, nimble digital solutions by partnering with them externally as well to deliver to consumers what is required.

I mean, we're sort of forward looking here, but recently I had to claim on a car insurance with one of the big players. And what I actually found incredible, and I hadn't made a claim on insurance for many years I suppose, was how easy it was. It was really seamless. And all those forms that I seemed to, I don't know whether I even remember it or whether I just imagined it, it was actually incredibly easy.

I mean, we're sort of forward looking here, but recently I had to claim on a car insurance with one of the big players. And what I actually found incredible, and I hadn't made a claim on insurance for many years I suppose, was how easy it was. It was really seamless. And all those forms that I seemed to, I don't know whether I even remember it or whether I just imagined it, it was actually incredibly easy.

Yeah. And look, this is absolutely in line with what we're talking about here with the industry as a whole, really transforming itself. And whilst there's still quite a way to go, a lot of that paperwork has been eliminated from every part of the insurance process. And that's really the simplest form of how technology can actually improve insurance as an industry, again, for consumers is actually to take away the inefficiencies, the paperwork and allow everything to be done online in a much more transparent, but a much more efficient process. And at the end of the day, as I said, it's that claims process, which is the make or break with the relationship that people have with insurance. If it's a good experience, then we think very positively about insurance and our coverage. If it's a negative experience, which traditionally where you had to put through lots of paperwork or make phone calls and be on hold for many hours, it really leaves a bad taste in the mouth. And certainly, it has been traditionally why historically insurance was not a well trusted industry. It relates back to the experience that people had. But it's really great to see technology starting to really transform insurance for the better.

Yeah. And look, this is absolutely in line with what we're talking about here with the industry as a whole, really transforming itself. And whilst there's still quite a way to go, a lot of that paperwork has been eliminated from every part of the insurance process. And that's really the simplest form of how technology can actually improve insurance as an industry, again, for consumers is actually to take away the inefficiencies, the paperwork and allow everything to be done online in a much more transparent, but a much more efficient process. And at the end of the day, as I said, it's that claims process, which is the make or break with the relationship that people have with insurance. If it's a good experience, then we think very positively about insurance and our coverage. If it's a negative experience, which traditionally where you had to put through lots of paperwork or make phone calls and be on hold for many hours, it really leaves a bad taste in the mouth. And certainly, it has been traditionally why historically insurance was not a well trusted industry. It relates back to the experience that people had. But it's really great to see technology starting to really transform insurance for the better.

I mean, I think insurance as a brand has always been dowdy. Is that being a bit unkind? The funny thing is, once you actually experience it now, it's not like that. What you said earlier on about was, insure as you drive. It made me think that some of these sorts of things, it's not just for the insurance companies. Obviously, it's better for them to become more efficient in their processes. But it's actually for people like me who potentially would end up paying less for insurance if those efficiencies can feed through the system.

I mean, I think insurance as a brand has always been dowdy. Is that being a bit unkind? The funny thing is, once you actually experience it now, it's not like that. What you said earlier on about was, insure as you drive. It made me think that some of these sorts of things, it's not just for the insurance companies. Obviously, it's better for them to become more efficient in their processes. But it's actually for people like me who potentially would end up paying less for insurance if those efficiencies can feed through the system.

Yeah, that's exactly right. And a lot of insurtech is actually aimed at decreasing the overall cost of insurance. So we know that insurance costs do continue to rise globally, not just in Australia. Insurance has not been a favourite, as you said, a favourite topic of conversation for many people historically. But these days, there are certainly improvements being made. In terms of the reduction of costs, obviously, as I mentioned before, using things like artificial intelligence and machine learning to decrease the administration of insurance and increase efficiencies is one big way that costs can be reduced. But there's another really interesting aspect which is starting to emerge where technology is actually helping to reduce insurance costs by playing a big role in risk mitigation strategies prior to insurance events or claimable events occurring. And this is really in line with the trend towards more of a predict and protect model of insurance and moving away from the transactional insurance model. And so what I mean by that is things like flood and weather prediction and protection capabilities that go alongside what home insurance policies in at risk areas or even an area which is hugely important for us today, cyber security. Cyber security tools that help companies avoid attacks that go alongside a cyber security insurance policy. So there are a couple of examples where technology is actually helping to support, reduce the risk before claimable incidents actually occur. And overall, that's also going to help reduce the cost of insurance for consumers and businesses.

Yeah, that's exactly right. And a lot of insurtech is actually aimed at decreasing the overall cost of insurance. So we know that insurance costs do continue to rise globally, not just in Australia. Insurance has not been a favourite, as you said, a favourite topic of conversation for many people historically. But these days, there are certainly improvements being made. In terms of the reduction of costs, obviously, as I mentioned before, using things like artificial intelligence and machine learning to decrease the administration of insurance and increase efficiencies is one big way that costs can be reduced. But there's another really interesting aspect which is starting to emerge where technology is actually helping to reduce insurance costs by playing a big role in risk mitigation strategies prior to insurance events or claimable events occurring. And this is really in line with the trend towards more of a predict and protect model of insurance and moving away from the transactional insurance model. And so what I mean by that is things like flood and weather prediction and protection capabilities that go alongside what home insurance policies in at risk areas or even an area which is hugely important for us today, cyber security. Cyber security tools that help companies avoid attacks that go alongside a cyber security insurance policy. So there are a couple of examples where technology is actually helping to support, reduce the risk before claimable incidents actually occur. And overall, that's also going to help reduce the cost of insurance for consumers and businesses.

And presumably big data over time will actually allow insurance companies to have more targeted and appropriate policies for individuals or businesses.

And presumably big data over time will actually allow insurance companies to have more targeted and appropriate policies for individuals or businesses.

One hundred per cent. And historically, again, that's not really been the case where insurance has been very tailored to businesses and individuals. But the access to big data and what I would say is insurers have always had a lot of data and they've always stored a lot of data. But traditionally they have not had the tools to analyse it really effectively, to be able to drill down and accurately price without having to use people to do that, to actually be able to use technology to use the data and accurately price these huge amounts more data available to insurers today. And this is going to be a huge area where that data is being used for the good of being able to price more effectively, but also to provide more tailored solutions for individuals and businesses as well using the data.

One hundred per cent. And historically, again, that's not really been the case where insurance has been very tailored to businesses and individuals. But the access to big data and what I would say is insurers have always had a lot of data and they've always stored a lot of data. But traditionally they have not had the tools to analyse it really effectively, to be able to drill down and accurately price without having to use people to do that, to actually be able to use technology to use the data and accurately price these huge amounts more data available to insurers today. And this is going to be a huge area where that data is being used for the good of being able to price more effectively, but also to provide more tailored solutions for individuals and businesses as well using the data.

Stay with me, Rita. We'll be back in a minute.

Stay with me, Rita. We'll be back in a minute.

My guest this morning is Rita Yates, CEO of Insurtech Australia. You mentioned cybercrime a moment ago. Are there many new forms of events that need insurance and then do some drop off as well?

My guest this morning is Rita Yates, CEO of Insurtech Australia. You mentioned cybercrime a moment ago. Are there many new forms of events that need insurance and then do some drop off as well?

Yeah, look, I don't see any dropping off in particular. I mean, I think the interesting thing there is that absolutely cybersecurity and cyber insurance is a huge developing area and it's very much in its infancy globally. So there's going to be a lot of new developments in this space, new products in this space and so forth that develop over time as the risk of cyber crime and cyber incidents continues to increase. So that this is a really interesting area that we are keeping a close eye on and that technology will play a major role within. In terms of areas that are emerging that require cover, our lives and our lifestyles continue to change. So the way that we are engaging with insurance is changing to a degree. So new products will continue to play a role in our evolving lifestyle. And an example is the rise of the gig economy, for example. Now, gig economy insurance never existed a few years ago, but there are certainly products that are emerging to cover gig economy workers in line with the way that our lifestyles are changing and our work lives are changing in the future.

Yeah, look, I don't see any dropping off in particular. I mean, I think the interesting thing there is that absolutely cybersecurity and cyber insurance is a huge developing area and it's very much in its infancy globally. So there's going to be a lot of new developments in this space, new products in this space and so forth that develop over time as the risk of cyber crime and cyber incidents continues to increase. So that this is a really interesting area that we are keeping a close eye on and that technology will play a major role within. In terms of areas that are emerging that require cover, our lives and our lifestyles continue to change. So the way that we are engaging with insurance is changing to a degree. So new products will continue to play a role in our evolving lifestyle. And an example is the rise of the gig economy, for example. Now, gig economy insurance never existed a few years ago, but there are certainly products that are emerging to cover gig economy workers in line with the way that our lifestyles are changing and our work lives are changing in the future.

So all of these developments in the insurance industry, is the regulatory landscape as well evolved? And can it handle these sorts of changes?

So all of these developments in the insurance industry, is the regulatory landscape as well evolved? And can it handle these sorts of changes?

Well, as you probably know, there's a huge amount of regulatory change post the royal commission in insurance along with other industries. And I don't think necessarily there needs to be more regulation, but possibly the environment could be more conducive to insurtech and innovation more broadly. So, insurtechs obviously operate within the current regulatory landscape. The good thing for insurtechs are that, generally, they're not seeking an insurance licence to act as a full stack insurer, which is lucky because that's an incredibly difficult thing to do. On the positive side, there is a regulatory sandbox which was developed some time ago where essentially insurtechs and fintechs can test their innovations. It would be great to see that expanded because it's quite limited at the moment. And the other interesting area of regulation which is developing, which will play a role in insurance moving forward, is open banking and the consumer data right. Now, at the moment, this only affects banking and banking customers, and it essentially allows consumers to more easily share their data and then switch products and services between banks. And that continues to evolve and it continues to be rolled out. As an industry, we would actually love to see the consumer data right expanded into insurance, which would obviously allow the same for consumers seeking insurance products, the same options. And it's likely that in the not too distant future, I think we're still a few years away from that, that insurance will actually reach that consumer data right timeline and there will be changes in legislation around that.

Well, as you probably know, there's a huge amount of regulatory change post the royal commission in insurance along with other industries. And I don't think necessarily there needs to be more regulation, but possibly the environment could be more conducive to insurtech and innovation more broadly. So, insurtechs obviously operate within the current regulatory landscape. The good thing for insurtechs are that, generally, they're not seeking an insurance licence to act as a full stack insurer, which is lucky because that's an incredibly difficult thing to do. On the positive side, there is a regulatory sandbox which was developed some time ago where essentially insurtechs and fintechs can test their innovations. It would be great to see that expanded because it's quite limited at the moment. And the other interesting area of regulation which is developing, which will play a role in insurance moving forward, is open banking and the consumer data right. Now, at the moment, this only affects banking and banking customers, and it essentially allows consumers to more easily share their data and then switch products and services between banks. And that continues to evolve and it continues to be rolled out. As an industry, we would actually love to see the consumer data right expanded into insurance, which would obviously allow the same for consumers seeking insurance products, the same options. And it's likely that in the not too distant future, I think we're still a few years away from that, that insurance will actually reach that consumer data right timeline and there will be changes in legislation around that.

OK, and just finally, how big is the insurtech sector in Australia? Like where do we rate globally?

OK, and just finally, how big is the insurtech sector in Australia? Like where do we rate globally?

Well, globally, there are over a thousand insurtechs operating now. We have in Australia around 80 insurtech start ups and scale ups that are members of Insurtech Australia, and that really represents the majority of insurtechs that operate here. It's quite a large number, considering it's actually a really new industry in Australia. And when we first launched in Australia in 2017, we literally had a handful of insurtech organisations that were members of ours. So around 90 per cent of our current members are Australian companies and then the rest of those are international insurtechs that have scaled into Australia. And that's interestingly an increasing trend to see international insurtech organisations seeing Australia as a really positive place to move into and a positive environment to move into. A number of our Australian insurtechs have also scaled globally or are looking to scale globally. And generally speaking, Aussie insurtechs do create their propositions to go global at some point because it's quite a small market here, the Australian insurance market. In terms of how we stack up in the rest of the world, we are a very well established and well connected and well respected ecosystem. We are involved in many global insurtech initiatives and we're also one of the founders of the Global Insurtech Alliance in 2018, where organisations like ours from other regions are connected across the globe.

Well, globally, there are over a thousand insurtechs operating now. We have in Australia around 80 insurtech start ups and scale ups that are members of Insurtech Australia, and that really represents the majority of insurtechs that operate here. It's quite a large number, considering it's actually a really new industry in Australia. And when we first launched in Australia in 2017, we literally had a handful of insurtech organisations that were members of ours. So around 90 per cent of our current members are Australian companies and then the rest of those are international insurtechs that have scaled into Australia. And that's interestingly an increasing trend to see international insurtech organisations seeing Australia as a really positive place to move into and a positive environment to move into. A number of our Australian insurtechs have also scaled globally or are looking to scale globally. And generally speaking, Aussie insurtechs do create their propositions to go global at some point because it's quite a small market here, the Australian insurance market. In terms of how we stack up in the rest of the world, we are a very well established and well connected and well respected ecosystem. We are involved in many global insurtech initiatives and we're also one of the founders of the Global Insurtech Alliance in 2018, where organisations like ours from other regions are connected across the globe.

Fantastic. Rita, thank you for talking to Fear and Greed.

Fantastic. Rita, thank you for talking to Fear and Greed.

Thanks for having me.

Thanks for having me.

That was Rita Yates, CEO and co-founder of Insurtech Australia.

That was Rita Yates, CEO and co-founder of Insurtech Australia.

This is a Fear and Greed Daily Interview. Join me every morning for the full Fear and Greed podcast with all the business news you need to know. I'm Sean Aylmer. Enjoy your day.

This is a Fear and Greed Daily Interview. Join me every morning for the full Fear and Greed podcast with all the business news you need to know. I'm Sean Aylmer. Enjoy your day.